European distributors up download business

French exhibitor MK2 opens its 13th branch online

PARIS — Last month Gallic mini-major MK2 gambled on a virtual future by becoming the first European film exhibitor to launch its own video-on-demand Web site, MK2VOD.com.

“We’ve been planning this for a while,” says topper Nathanael Karmitz, who took over the running of MK2 from his father, Marin Karmitz, in October 2005. “We see VOD as another means of distribution, an extension of our work as exhibitors, rather like having (another) theater.”

The MK2 site is just one of a growing number of VOD sites that have started to sprout up in Europe over the past couple of years. According to a recent survey by the Strasbourg-based European Audiovisual Observatory (OEA), there are over 150 VOD sites currently operating throughout Europe.

Telecom operators have the biggest slice of the pie, accounting for almost 40% of Europe’s VOD market. As yet, there is no European equivalent to the studio-backed U.S. service Movielink. Nor is there a European film distributor with a pan-European strategy and the capacity to purchase VOD rights for the whole Euro market. But there are retailers, like Britain’s Lovefilm and Internet service providers like Italy’s Tiscali, that have begun to develop several VOD services tailored to different European countries.

According to Andre Lange, OEA’s head of marketing and finance, VOD transactions in France last year amounted to just over $22 million, a tiny fraction of DVD sales. The strategy for many appears to depend on carving out and maintaining a niche: MK2, for instance, is offering French viewers a broad selection of lesser-known pics, as well as providing a host of cinephile-friendly virtual extras.

“We wanted to propose the kind of films that people surfing the Internet might not have thought about watching or have never heard of,” says MK2’s director of multimedia Emmanuel Gillibert, who created the site. “To make the site user-friendly, we are organizing the films thematically, offering things like a Cannes cycle or a Midnight Movie selection or a Sunday selection.”

At present, the service offers some 500 pics to choose from (at $5-$7 a pop), a mixture of inhouse titles and films from other producers. Titles in the top five rentals list include Alejandro Gonzalez Inarritu’s “Amores perros,” Peter Greenaway’s “The Draughtsman’s Contract” and Michael Mann’s “The Insider.” Gillibert hopes to increase the number of pics to 2,000 by September, but refuses to talk specific figures about the site’s performance so far.

“Most companies don’t want to go into how much they’re making because it’s still a very fragile market out there,” explains Lange. “Getting hold of the rights to popular U.S. titles is a tricky business, and nobody wants to show any signs of weakness.”

Even negotiating a company’s own back catalog can be a prickly problem, as MK2 discovered with its Charlie Chaplin and Buster Keaton titles.

“It’s a very new platform, and when we originally negotiated the rights to many of the films in our catalog, there was no mention of VOD,” says Gillibert. “With each film you have to renegotiate the rights for VOD. Our goal is to eventually make all of the MK2 films available to watch on VOD. For the moment there are about 60 available, and we’re hoping that eventually we’ll be able to show the rest.”